What is Interest Cover Ratio (ICR)?

ICR is a measure used by lenders to show whether the rental income from a property is enough to cover the mortgage and other costs. ICR ensures that the money you make from renting is sufficient to pay off your loan. Learn more about ICR below.

What is Top Slicing?

Top Slicing is a method used by lenders to help assess mortgage affordability. It involves considering your disposable income (money left after expenses) to fill any gaps if the rental income alone isn’t enough to cover the mortgage payments. This helps borrowers meet the lender’s mortgage affordability criteria by using an applicant’s personal income to supplement the rental income. Learn more about Top Slicing below.

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What is the Significance of Interest Cover Ratio (ICR) and Stress Rates?

ICR has become a pivotal when gauging the affordability of rental properties by assessing whether rental income adequately covers mortgage and property costs.

Stress rates, set above actual interest rates, add an extra layer of security for lenders. In some cases, rental income may need to cover up to 145% of the stressed mortgage interest, which of course affects the borrowing capacity of investors. Liquid Expat have arrangements where Lenders can stress at 100% of mortgage interest and also take in to account any shortfalls via clients disposable income.

Navigating the Evolving Terrain of Buy-to-Let Mortgages for Expats and Foreign Nationals

The Buy-to-Let investment landscape has changed considerably in the last 12 months and investors seeking their next Buy-to-Let property now face a unique set of challenges.

Landlords face some of the highest interest rates seen in over a decade and existing Buy-to-Let mortgage holders face the harsh reality of interest rate hikes when their current agreements come to an end. As a result lenders have placed increased emphasis on the need for stress rates and Interest Cover Ratio (ICR) on BTL mortgages.

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Meeting the Challenges through Innovative Solutions

As a BTL Expat mortgage specialist, and in response to the stringent lender ICR requirements and the new stress rate criteria, we have worked with several specialist lenders to deliver specific Buy-to-Let limited-edition products designed to assist Landlords with a solution to the new lending challenges.

These specialist lenders have adopted innovative underwriting “Top Slicing” criteria which considers the client’s disposable income to bridge the lender’s ICR gap.

With our help we can help landlords to collaborate with specialist lenders to offer a more personalised approach to your mortgage application. The flexibility of this approach is not commonly found with mainstream lenders and allows you as a landlord to stay one step ahead of the volatile market.

If you would like to understand how you can use “Top Slicing” to increase your maximum borrowing amount, please speak to one of our Mortgage Advisers now.

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How can Liquid Expat help Buy-to-Let Landlords?

Our many years of experience working with the largest panel of lenders available to any a UK Expat broker, means we can now access potential solutions for Landlord BTL Mortgages. Many of these innovative new products now come with minimal or no early repayment charges, offering attractive options for borrowers while minimising risk for lenders.

Why Landlords should consider Interest Cover Ratio (ICR):

  • To Ensure Affordability  ICR ensures that the rental income generated from a property is sufficient to cover the mortgage payments and related costs. This helps landlords ensure that they can afford the property and meet their financial obligations.
  • To Mitigate Risk  By having a healthy ICR, landlords reduce the risk of financial strain. It provides a buffer, ensuring that even if circumstances change, such as a temporary vacancy or unexpected expenses, there is still enough income to cover mortgage payments.
  • For Lender Approval – Many lenders use ICR as a key criterion for approving Buy-to-Let mortgages. A strong ICR is often required to secure financing. If you don’t meet the lender’s ICR threshold, the mortgage loan can lead to reduced borrowing capacity or in extreme cases can result in a loan refusal.

Why Landlords should consider Top Slicing:

  • It Expands Borrowing Capacity Top Slicing allows landlords to use their personal income to supplement rental income. This can be crucial when the property’s rental income alone doesn’t meet the lender’s criteria. Top Slicing expands borrowing capacity by considering the landlord’s overall financial situation.

  • It Allows Flexibility in Challenging Markets In markets with rising interest rates or other challenges, Top Slicing offers flexibility. Landlords can demonstrate their ability to cover mortgage payments through personal income, addressing gaps in rental income and ensuring financial stability.

  • It Allows Access to Competitive Products Landlords using Top Slicing may have access to a broader range of mortgage products. This includes limited-edition or competitive products offered by specialist lenders, giving the landlord more options in navigating challenging market conditions.

Interested? Contact Liquid Expat Mortgages to discuss your needs.

In summary, both Interest Cover Ratio (ICR) and Top Slicing are crucial for landlords as they ensure affordability, mitigate financial risk, meet lender requirements, and provide flexibility in varying market conditions, ultimately contributing to the success and sustainability of a property investment. If you would like to understand how ICR and Top Slicing can increase your maximum borrowing amount, please contact Liquid Expat Mortgages, and let us assist you with your Buy-to-Let Mortgage options.

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Interest Cover Ratio & Top Slicing Case Studies

Learn how our expert team helped clients use ICR & Top Slicing despite difficult or complex circumstances.

Case Study – UK Expat Takes Advantage Of Top Slicing

Read this great case study on how Liquid Expat Mortgages helped a UK expat purchase a new investment property using Top Slicing.

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Case Study – Utilising Top Slicing For UK Expat Mortgage

Read this great case study on how Liquid Expat Mortgages helped a UK expat living in Singapore by using top slicing to successfully secure them a new mortgage.

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Case Study – Self-Employed Expat Entrepreneur

Read this great case study on how Liquid Expat Mortgages helped a self-employed expat by using top slicing to successfully secure them a remortgage.

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Liquid Expat Mortgages Reviews

Read reviews left by our clients on Google.

Based on 171 reviews
Ellen Stokes
Ellen Stokes
We came back to the UK in July 2022 after almost 20 years abroad and discovered that, as an "expat", borrowing for a new home is very difficult. Liquid Expat made it possible and we have just moved into our new home. They are specialists in the field and we would recommend them to all expats needing a mortgage.
Tania Tulen
Tania Tulen
Excellent communication and great service. Explained the process every step of the way and were always responsive by email and whatsapp. Thank you!
David Hasdell (Wingaroo)
David Hasdell (Wingaroo)
Great process from start to finish - from knowledge of the market and carefully tailoring products to suit our needs, and then super-efficient assistance right through the whole application process.
Jonathan LH
Jonathan LH
Liquid Expat are superb. They were fast, professional and went the extra mile to help us secure our mortgage. And I had a TRICKY case for them (British citizen living in Zambia and purchasing in the UK) bit they managed to get it solved. Total rock stars, all of them
Catherine Chan
Catherine Chan
Thank you so much to Rebecca and Fatgiya. They are absolutely professional in guiding me throughout the whole application. It was super struggle to answer thousands of questions from the lender but Fatgiyi help me solve them one by one. They definitely deserve a 5 stars!
Tracie Harrington Hodges
Tracie Harrington Hodges
After an initially shakey experience with a staff member who subsequently left Jae came in like a super hero and helped me to get this deal done. I have been having an immense amount of trouble with my own legal representation (!!!!) and Jae has been the guiding light.
Matt Jones
Matt Jones
We're really pleased with the service provided by Liquid Expat - right from the first conversation through to completion - every step has been managed really professionally and the team have helped us through the process. Thanks to Claire and Liam especially for all your support - I have no hesitation in recommending their services.
Sikar Chan
Sikar Chan
Liquid Expat helped a lot in providing mortgage service and guidance throughout the process. Their response time to my email is super fast! I will use their service again and recommend to my friends and family. Excellent!